PU foam sheet classification turns on further working and condition of clearance, with cum-duty valuation applied on remand.

Tariff classification of PU foam sheets depends on the form in which they are cleared from the factory and whether further working changes their identity. Sheets cut to mattress size and reinforced with industrial tape on the edges assume the character of mattresses and fall under Heading 94.04. PU foam sheets merely cut to mattress or cushion size, without such tape or further working, remain sheets under Heading 39.21 even if intended for later use as mattresses or cushions. On remand, the assessable value must be recomputed on a cum-duty basis in line with the applicable valuation principle.

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Issues: (i) whether PU foam sheets cut to mattress size and affixed with industrial tape on the edges were classifiable as mattresses under Heading 94.04 or as sheets under Heading 39.21; (ii) whether PU foam sheets cut to mattress or cushion size but without industrial tape remained classifiable under Heading 39.21; (iii) whether the assessable value required re-determination on a cum-duty basis on remand.

Issue (i): whether PU foam sheets cut to mattress size and affixed with industrial tape on the edges were classifiable as mattresses under Heading 94.04 or as sheets under Heading 39.21.

Analysis: Classification was determined by the condition in which the goods were cleared from the factory and by the effect of further working on the sheets. The earlier decision in the assessee's own case had held that sheets cut to mattress size, when reinforced or supported on the edges, ceased to remain mere sheets and assumed the character of mattresses. The tariff note and the trade notice did not displace this conclusion where the goods were presented as mattresses after such further working.

Conclusion: PU foam sheets cut to mattress size and affixed with industrial tape on the edges were held classifiable under Heading 94.04.

Issue (ii): whether PU foam sheets cut to mattress or cushion size but without industrial tape remained classifiable under Heading 39.21.

Analysis: Where the goods were only cut into rectangular sheets and were not further worked by affixing tape on the edges, they remained sheets within the meaning of Chapter 39. The clarification of the Customs Cooperation Council supported classification of expanded polyurethane sheets merely cut into rectangles under Heading 39.21 even if intended for use as mattresses. The fact that the goods were later used as mattresses or cushions did not alter their tariff identity at the stage of clearance.

Conclusion: PU foam sheets cut to mattress or cushion size but without industrial tape were held classifiable under Heading 39.21.

Issue (iii): whether the assessable value required re-determination on a cum-duty basis on remand.

Analysis: After classifying the goods differently depending on whether industrial tape had been affixed, the matter had to be sent back for recomputation of duty. For that exercise, the assessable value was required to be worked out treating the sale price as cum-duty price in accordance with the governing precedents on valuation.

Conclusion: The assessable value was directed to be re-determined on a cum-duty basis by the adjudicating authority.

Final Conclusion: The classification was split depending on the nature of further working done on the foam sheets, and the duty demand was sent back for fresh computation in accordance with that classification and valuation principle.

Ratio Decidendi: For tariff classification, the decisive factor is the form in which the goods are cleared and whether they have been further worked so as to acquire the identity of the specific article named in the tariff; merely intended or eventual use does not by itself change classification.

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